CIOs on a diet of rice pudding

It will come as unsettling news that IT, far from cementing its place as the key to organisations' competitive advantage, appears to be waning in influence.

It will come as unsettling news that IT, far from cementing its place as the key to organisations’ competitive advantage, appears to be waning in influence. For IT bosses whose ambitions are based on a belief in their strategic importance, this will be a bit of a setback. But whether it’s a permanent loss of clout or a mere blip brought about by passing conservatism in IT investment, remains to be seen.

The sobering news was served up to information chiefs at last week’s CIO Conference in Auckland (staged by Computerworld stablemate CIO magazine). It was delivered by Sydney-based IDC analyst Peter Hind, who set the tone by reciting the AA Milne rhyme “What is the matter with Mary Jane?”.

Mary Jane’s complaint is rice pudding – stodgy stuff which she’s had too much of. Hind’s message was that CIOs have been getting a similar diet in the past year – nutritionally worthy, but hardly mouth-watering. I know the experience. I was in a hot part of the world where fridges were scarce, so played safe by force-feeding myself rice pud for a few months. Adding sardines just made it rice pudding with sardines; adding mangoes relieved the monotony slightly, but it was still rice pudding. Hind’s metaphorical rice pudding is the comparatively boring operational side of IT, as opposed to deployment of the technology for strategic gain.

CIOs tell Hind what’s on their plates — and minds -- in an annual Forecast for Management survey, a poll of Australian and New Zealand IT executives. His latest questionnaire drew about 100 New Zealand responses, 18% coming from organisations with more than 1000 staff, while 30% were from outfits with fewer than 100. About a third were public sector organisations while the rest were mostly producers or distributors of goods, or financial or business service providers. His sample might not be huge, but having been surveying them for several years, there are clear trends to be seen.

In the past year, CIOs appear to have somewhat lost the ear of chief executives. Fewer of them report to the big boss than in the past – 40% in 2001 compared with just under 60% in 1999 (admittedly, chief executives would have had heightened IT-awareness during the Y2K panic). There’s been a corresponding fall in representation of CEOs on IT steering committees: in the Y2K build-up it was close to 40% whereas last year it was closer to 20%.

These days CIOs are more likely to report to operations, services or finance heads, Hind’s examination of their dirty dishes finds. Given that, it’s not surprising that just under 80% are seen as contributors to operational capability (up from 60% a year ago), while only 10% are a source of competitive advantage (compared with more than 20% last year). Keeping operations running is obviously important, but who wouldn’t rather be staking their reputation on a leading-edge project that could propel their employer into the headlines? Most of us, so long as the headlines were positive. Hind’s survey seems to confirm that such caution is on the rise.

Signs of it are to be seen in a decline in the number of organisations choosing to lease IT gear – more are buying outright. This might seem at odds with the common perception of leasing’s advantage – the avoidance of capital expenditure. But according to Hind, leasing arrangements can mean organisations are contracted to keep paying for some piece of IT infrastructure beyond the time when they want it. In other words, a drive for flexibility is causing CIOs to shy away from long-term spending commitments.

Risk aversion is also Hind’s interpretation of a sharp decline in the use of contractors (from 15% of IT personnel in 2001 to 2% today). That finding certainly gels with the evaporation of the IT recruitment market over the past 12 to 18 months. The jobs aren’t necessarily disappearing but contractors are becoming permanent employees. If that appears to contradict his earlier conclusion that organisations are looking for greater flexibility, it needs to be balanced against the fact that employees are cheaper.

But bringing expertise in-house doesn’t seem to be the trend across the board. The survey shows outsourcing – to “embellish” in-house systems -- is on the rise, particularly in systems and network support, but also in application maintenance and development. One wonders what all those ex-contractors who’re now on staff are doing.

They’re not, apparently, doing so much supply chain management work (down 43% on last year) or workflow projects (down 26%) or sales force automation (down 20%). It’s much more likely that they’ll be engaged in smart card (376% two-year forecast growth in use) or WAP (312% two-year forecast growth) projects.

Hind has a recipe for relieving some of the rice pudding sameness. Most CIOs in his sample (less than 20%) play little part in library and records management. This seems odd, considering the “information” role implied by the CIO title. If they were looking for ways to increase their usefulness, they might persuade the operations/services/finance chiefs to whom they increasingly answer of the contribution they could make in this area of information management.

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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